Government regulators said Thursday that people who keep cash with payment tools like Cash App, PayPal and Venmo are at risk of losing their money in a crisis because the funds are not protected by federal deposit insurance.
The Federal Deposit Insurance Corporation and National Credit Union Administration insure up to $250,000 in a bank account, but funds stored with a nonbank payment app may not be held at a lender that offers such protection, the Consumer Financial Protection Bureau said in anThe upshot: If a payment service suddenly folds, any consumer funds stored on the app could vaporize.
The financial watchdog advised consumers to transfer any funds stored on a payment app to an insured bank or credit union. PayPal, which owns Venmo, and Square, owner of Cash App, did not immediately respond to requests for comment.
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